Economics, Pethokoukis

Dismal December jobs report shows another lost year for US workers


While the December jobs report — 155,000 net new payrolls, 7.8% unemployment rate — was more or less in line with official analyst expectations, plenty of Wall Street economists thought it just might surprise to the upside. Maybe 200,000 jobs or more went the “whisper” estimates.

It didn’t happen.

Instead it was same old, same old. The increase in total nonfarm payroll employment was only a smidgen better than the average 2012 employment growth of 153,000 jobs per month. And that was exactly the same as the average monthly gain for 2011. And at that pace, the US won’t return to pre-Great Recession employment levels until after 2025, according to the Jobs Gap calculator from the Hamilton Project.

Indeed, if the labor force participation rate last month, 63.6%, were the same as in December 2011, 64.0%, the “official” or U-3 unemployment rate today would be 8.4%, only a bit better than the December 2011 rate of 8.5%.

In addition, average hourly earnings rose by just 2.1% over 2012, about the same as inflation. That means real wage growth was pretty much flat.

Hard to call that progress. In fact, 2012 was another lost year for American workers.

Let’s run through some more of the December numbers to gain some perspective:

14.4%: The U-6 unemployment rate, which includes a) part-timers who want full-time work and b) the discouraged who want a job but haven’t searched for work in the prior month because they believe no jobs are available. Same as November.

10.7%: The U-3 unemployment rate if the labor force participation rate were back to its January 2009 level, when President Obama took office.

10.4%: The U-3 unemployment rate if the labor force participation rate were at the 2012 level predicted by the Congressional Budget Office before the Great Recession. This assumes that as the US ages, the LFP will continue to decline.

And this ….

5.2%: The unemployment rate that Team Obama predicted for December 2012 if Congress passed the $800 billion stimulus.



46 thoughts on “Dismal December jobs report shows another lost year for US workers

      • Max Planc – I’ve never understood how the Bush administration was to blame for the recession of 2008 save for the support of artificially low interest rates. Please explain. Thanks

        • Bush had an average of 4.6% unemployment. His deficit vs. GDP was 2.1%. (Obama’s is nearing 13%). And because he lowered taxes, more money went into the treasury that ever in the history of the US. His admin. went before Congress 17 times to get them to place controls on the financial industry, which Congress refused to do because “everything was fine.” (Barney Frank, Chris Dodd, and Maxine Waters.) And, when the Democrats took over both houses in 2006, everything went downhill from there. Yet, people still blame Bush. Maxine Waters placed her Buddy, Franklin Raines, in charge of Fannie Mae. They lost billion$, yet he made over $90 million in bonuses. And now he is an economic advisor to Obama.

    • More important than the cause of the dropoff from ’08 through ’09 is what has prevented the rate from going back up from ’09 to the present.

      No doubt it’s the fault of Bush, Cheney, McConnell, and Boehner. If only Pelosi, Obama, and Reid hadn’t had to stand helplessly by while the Tea Party has ruined the country since the Spring of 2009.

      • Tea Party? What political power do they have? What I don’t see their name on any legislation. All they’ve done is protest since 2009. What “standing by” has P, O, and R done? They’ve pushed through everything they wanted. The downturn was caused by giving loans to people who would never pay them back. The recovery is stymied by anti-business and anti-capitalist lunacy in the White House.

        • I hate to say it, gents, but that’s pretty much 100% right. The mortgage debacle destroyed the entire world’s money systems, which are all based entirely on faith and credit. It had nothing to do with Bush, Cheney, et al. It simply destroyed the debt vehicle that consumers in the U.S. were using to fund their consumption: mortgages. So, the gubmint is simply substituting public borrowing to try to get consumption back up to pre-2009 levels. One bubble in place of another is all that is, and it will end with a graph that looks the same as the one above.

          • I agree with your statement, but think that the rapid rise in fuel costs (poor energy policy? rapidly falling value of the dollar?) played the determining role in the bursting of the mortgage bubble. It was this little extra something, so to speak, that caused large numbers of consumers to no longer be able to afford their over-sized mortgages.

          • right. and who’s to blame for the mortgage debacle? a certain hyper obnoxious congressman from massachusetts.

            and as for the “tea party” idiocy proffered somewhere above, who had a clear majority in both houses of congress in 09/10? obama/reid/pelosi were/are so wacky they couldn’t even get their own party in line with a total majority. and now we have to listen to idiot pundits talk about a “discipline” problem in the republican party. the media class is even more loathsome than congress itself.

      • Ridiculous. The Democrats had the majority in the House AND Senate until the 2010 mid-terms. It is impossible to credibly blame the Republicans for what happened during a period they had control of neither chamber of Congress.

        • Hey Man! You’re harshing my brain-dead liberal narrative. Booooooosssshhhh did it. Boooooooooshh. He did everyyyyyyyythingggg.

          He was the cause of our 375% debt to GDP ratio, he was the cause of $20T in unfunded liabilities in FDR’s social welfare program (aka SS), he was the cause of $40T in unfunded liabilities in Johnson’s Great Society.

          Boooooossssshhhh did it. Buuuuuussshhh.

    • How did Bush cause the bank failures from too many subprime loans. Carter signed the Community
      Revitalization bill that still requires banks to make some subprime loans. As we move forward Clinton signed the repeal of Glass-Steagall that allowed banks to get “too big to fail” and Barnie Frank blocked regulator requests to give them more authority to regulate Freddie Mac and Fannie Mae.

      I suggest anyone who wants to know what really happened to our economy watch this video. Most liberals
      like to blame Bush for the economy. Actually it started in the Clinton administration. Alan Greenspan is the real culprit.

      “In The Warning, veteran FRONTLINE producer Michael Kirk unearths the hidden history of the nation’s worst financial crisis since the Great Depression. At the center of it all he finds Brooksley Born, who speaks for the first time on television about her failed campaign to regulate the secretive, multitrillion-dollar derivatives market whose crash helped trigger the financial collapse in the fall of 2008.”

      This documentary sets the record straight. Here’s the link to the truth.

    • The same thing that usually screws up an economy, Dave: government intervention in the private economy, in this case the housing market. You should read more; there has actually been a fair amount of attention given to the topic. Good catch, though! I admire your interest in what happened five years ago in this post reviewing the miserable record of the past four years!

    • Imagine if you were holding a cannon ball in your hands. You let it go, but instead of falling, it hovers in the air. Would your first question be, “How did the cannon ball get their in the first place?”

  1. Now…here comes the fun question. What caused the real estate bubble that was, frankly, destined to burst? If anyone’s answer is in two- or three-word sentences that may include or infer the names Bush or Cheney, they clearly don’t understand the problem or the issues.

  2. What caused the real estate bubble?

    CRA/Federal Reserve/Fannie/Freddie/FHA;
    James Johnson/Franklin Raines/Chris Dodd/Barney Frank/Rahm Emanuel/Jamie Gorelick;
    That’s enough to start the conversation.

    • As much as that? Greed.

      If not the entirety of the problem, it was a major contributing factor. Many seem perfectly willing to ignore that no one held a gun to anyone’s head forcing them to sign a mortgage. They ignored that prices were inflating far faster than the wages needed to support needed to pay for the houses, and that given that set of circumstances, an eventual burst was INEVITABLE. Speculative real-estate investing contributed greatly, with numerous analyses now showing that a substantial portion of the mortgages filed in the last couple of years before the burst were on second homes (investment properties).

    • Don’t forget the securities rating agencies that failed to downgrade Fannie and Freddie’s debt. If they would have done their job the banks would not have been so exposed to their failure.

  3. [email protected] |

    What would the unemployment rate be if the. American Jobs act would have passed? a full point lower most experts believe . Gee righties for the obstruction in the effort to defeat. obama. What great Americans.

    • I don’t see how the experts can know. Many experts also believed the various green jobs initiatives would have a major impact on employment. But that hasn’t turned out to be the case now, has it?

    • The same experts predicted the so called stimulus package would have us down to 6% unemployment by now. The Republicans just stopped the failed policy of passing pork barrel spending and calling it stimulus.

    • Fred,
      The “experts” are the ones who came up with the light and dark blue lines in the graph above, the got smacked in the head with the dotted-red reality.
      The “experts” are the ones who said junk mortgages could be bundled into mortgage-backed securities and sold as top quality investments.
      When are you going to learn, Fred?

  4. Obama is a Marxist and could care less about private employment; public employment yes he wants the votes.

    Workers, the 47%, don’t generate taxes for the Federal Government so he is busy with other matters.

    Want Obama to get interested in jobs – make them pay taxes and all of a sudden he will care about employment….

  5. “5.2%: The unemployment rate that Team Obama predicted for December 2012 if Congress passed the $800 billion stimulus.”

    In other words, it was a waste of almost a trillion bucks.

    First, we had Bush’s War, based on WMDs that never were and which cost trillions of dollars. Now we have Obama’s “stimulus” and other measures based on anticipation of a recovery that never happened and which has cost over a trillion dollars.

    Amateurish incompetence rules, no matter what party is in charge, and it mystifies me why Americans tolerate the collection of clowns that constitute the American government.

    • The stimulis has stayed in the budget because Harry Ried never put forth another-hence the 5+ trillion borrowed and spent in 4 yrs, and it still hasn’t worked!!!

      • Mr Miller, you apparently don’t frequent the newspapers much. Syria has magically laid its hands on LOTs of WMDs in the form of chemical weapons. Given that there are already lots of testimony on large convoys between Iraq and Syria at the end of Saddam’s reign, and the total LACK of intelligence on Syria’s own WMD research, your faux even-handed approach to Bush and Obama may sound clever but speaks more of simple-mindedness. I don’t know why so many people have a problem with attributing any credit to George Bush for anything and simply lump him in with the current occupant of the White House. Believe it or not, there were some people in the WH who actually were good for this country, on balance.

  6. At what point can we finally, once and for all, declare that $800B “stimulus” (not to mention the Fed’s QEs) a colossal failure? The data’s as clear as it could possibly be, yet all we hear from the left is a) it wasn’t enough, b) it was all Bush’s fault, and c) it would’ve been worse if we hadn’t done it.

    The short-term deficits (1T/yr as far as the eye can see) and long-term deficits (100% GDP and climbing) are still abstractions to most Americans. But persistently high unemployment is a concrete problem that shows no sign of cracking. Do we have to wait until 2017 to declare Obamanomics officially refuted?

  7. Why sound so gloomy? Obama’s plan is working! After 4 years of the most disastrous, damaging Presidency in U.S. history people are dropping out of the workforce to go onto the Government dole by the millions. That will keep the UNEMPLOYMENT rate dropping, and in the meantime Obama and the Democrats get to count on anyone forced onto the Government dole as future voters for them, because scared, dependent people totally dependent on the Government for their living will vote for whomever is best at keeping the Government gravy flowing. Besides, these are the good times under Obama. With all the spending and DEBT we are getting closer and closer to the day of the Greece like collapse. And there is no hope with Obama in the White House for 4 more years that we can avoid disaster. Its guranteed!

  8. A long view goes back to Josef, Adolf and Franklin (listed according to date of assumption of power) and their various solutions to the economic problems of large states in the modern world. Franklin’s solution lasted the longest but fell apart in the early 1970′s. A fix in the 1980′s conscripted women for the workforce (leading to emotional barrenness of younger generations ), wasted resources for militarists’ profit and started the debt machine. Someday our Putin or Palin will appear.

  9. Enough already! Why doesn’t everyone just acknowledge that we are all at fault for the mess we are in. It comes down to one thing — the lack of personal responsibility. No one wants to acknowledge their own contribution to this mess. Everyone is responsible to one degree or another. Greedy and dishonest citizens; uninformed/greedy voters; greedy lawyers; inept politicians (all parties), and the list goes on and on. Everyone benefited when times were good (some more than others) and now we are all paying the price. No one escapes blame in my book….

  10. It’s globalism. Dumping billions of third world workers, many with fake resumes, degrees from diploma mills and printing shops, and fictitious skill sets, into our labor pool. Either by sending jobs over there or bringing millions of them over here via guest worker visas over the last decade. And a propaganda campaign that promoted them over us.

  11. The jobs situation is only going to get worse and worse over time. The elephant in the room that everyone seems to be missing is that continued advancements in technology and automation are going to continue to exacerbate the problem. There is simply not enough work necessary to accommodate the number of workers any longer and this is only going to get worse as more and more industries fall prey to automation and further increases in productivity.

    I wrote more about this topic recently, my article can be found here:

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